Index

The Survival of "Global Health" - Part Three: Why the World is so Wealthy, But Your Life Feels Otherwise: Significance for Global Health

The world
order and macroeconomics have changed radically since the U.S. financial
collapse of September 2008, and the impact on human health has been profound.
This is not a temporary, or passing fancy: This is a fundamental structural
alteration.

In its strategic
framework submitted to the World Health Assembly this week the
Director-General’s office notes that,
“instead of shared prosperity, globalization has been accompanied by widening
social inequalities and rapid depletion of natural resources…Globalization has
been superimposed upon pre‐existing problems and inequities; current policies
and institutions have failed to ensure a balance between economic, social and
environmental concerns; and, as a result, the pursuit of economic growth has
been too often seen as an end in itself.

“As the decade
progressed,” the DG’s office continues, “the world witnessed the most severe
financial and economic crisis since the 1930s. The full consequences of this
disaster have yet to play out. Nevertheless, it is already apparent that the
crisis has accelerated the advent of a new order in which growth is a feature
of several emerging and developing economies, and in which many developed
countries struggle to maintain a fragile recovery.”The chief winners in this
global reshuffling of the economic decks are the roughly 10 million wealthiest
individuals and a rarified list of sovereign wealth funds, banks, and top
corporations. Far from reflecting a Frederick Engels delineation of class
structure, the shift has come primarily at the expense of formerly prosperous
middle classes, even as the desperately poor in other parts of the world have
gained in stature. It is a complex picture, and its impact of “Global Health”
is complicated.

According to The Wealth Report 2012 prepared by Knight Frank and Citi Bank there has
been since the crash of 2008 a, “relentless growth of ‘plutonomy’ economics, a
phenomenon that sees the wealth of the richest 1% growing far quicker than that
of the general population.” The report documents the increase in individuals
labeled “centa-millionaires,” whose personal wealth can be calculated in the hundreds-of-millions.
In 2011 they collectively possessed $39.9 trillion of an estimated total global
wealth of $231 trillion, and their ranks are forecast to increase by 37% by
2016, chiefly swelling in China, India, Russia, Singapore, Hong Kong and Brazil. By 2050,
Citi predicts, the world will have been turned upside down with all money, and
the power that goes with it, shifted. India will rank firstwith a GDP of some
$86 trillion; China will be second with $80 trillion; the United States a
distant third at $39 trillion followed by - in order - Indonesia, Brazil, Nigeria, Russia, Mexico,
Japan and Egypt. Missing entirely from the projected top tier is Europe.

Overall
the world is witnessing a widening wealth gap in most countries, with assets concentrating in an oligarch top 1%, or even 0.1% of the population. Middle
classes in Western societies are shrinking both in size and comparative
personal wealth. In contrast, the middle
classes are swelling in China, India, Indonesia, and much Southeast Asia, as
the respective economies grow. However, the collective wealth of the class is
insignificant compared to the amount of wealth within the top 1% of these
countries. The middle classes are running to catch up, but the goal posts of
the rich keep moving. As The
Economist charted this last year, overall the world is witnessing a
widening wealth gap in most
countries, with assets concentrating in an oligarch top 1%, or even 0.1% of the population.

Middle
classes in Western societies are shrinking both in size and comparative
personal wealth. In contrast, the middle
classes are swelling in China, India, Indonesia and much Southeast Asia, as the
respective economies grow, but the collective wealth of the class is insignificant
compared to the amount of wealth within the top 1% of these countries. The
middle classes are running to catch up, but the goal posts of the rich keep
moving.

My colleagues in the CFR Geoeconomics Center have shown
that the expansion of global wealth is now divorced from the usual mechanisms that
trickle money down to the middle classes in North America, Europe – even in
some BRICS countries. Corporate profits are no longer in any way linked to
dividends paid out to stockholders, which has profound impact on retirement
programs and savings schemes for unionized labor, civil servants and middle
class individuals. Even as larger numbers of American workers, for example, are
dependent on stocks for their retirement income, fewer companies link stocks to
dividends, or even tie the value of their stocks to company profits and real
value.

Also unlinked to corporate profits are the salaries
and benefits of employees. Since the 2008 finanacial disaster corporate profits
have, on average, soared. But
so has unemployment. Average salary levels in the OECD countries have either
stagnated or fallen; salaries in the formerly “cheap labor” economies, such as
China, have risen (but remain far below their counterparts in Europe and North
America).

As more of world wealth concentrates in an
ever-smaller global oligarchy, a macroeconomic liquidity trap sets in.
Trillions of dollars are no longer generating jobs, buying goods, supporting
government services or available for the global good, such as HIV, TB or
maternal health programs. A recent McKinsey Company estimate reckons as much
as $32 trillion is currently hidden in tax havens, representing the personal
wealth of just ten million individuals.
If the estimate is accurate, 13 percent of world wealth is out of
circulation, creating no jobs, products or tangible assets. Another $3.5 to $6
trillion is locked in sovereign wealth funds, principally controlled by
extraction economy governments of the Middle East, Russia, and oil-soaked
African states.

Combined, the
impact of tax havens and wealth funds is removal of some fifteen percent of
global liquidity from the macroeconomy.

In the Big
Picture, these shifts have three significant impacts on Global Health.

First, a positive one: The reordering of world wealth
means nations that were long dependent on OECD charity to finance health
schemes can now become self-reliant. Whether a government chooses to get off
the global dole is one thing: Its financial possibility to do so is more likely
to exist today than at any time in history. Dr. Bernhard Schwartlander spoke to
this in his address to the International AIDS Conference in Washington, D.C.
last summer. Then the chief scientist for UNAIDS, Schwartlander told the
conference that,
“in 2000, when we began the fight for universal access to prevention and
treatment and the creation of the Global Fund, 70% of people with HIV lived in
low income countries. Eight years from now, it will be only 13%....In this new
and complex world, although poverty is as big a problem as ever, the days when
we had a simple world of rich countries and poor ones are gone. And with it, we
should abandon the concepts of dependency and charity, as well as habitual ways
of thinking and acting.”

As the
delegates of the World Health Assembly gather this week in Geneva, fewer of
them represent nations that are dependent on donations from outsiders to cover
the financing of their healthcare and prevention programs. The absolute number
of dependent individuals in the world may not have changed, but government
dependency is clearly on the decline. That is the good news.

But the second outcome of this massive restructuring
of the world economy is less sanguine. Economic despair is killing people. As the recession crisis unfolded in Europe the consequences
of austerity measures on poor and middle class
individuals, versus maintenance of high caliber medical care for the wealthy came into
sharp relief. In Greece, for example, several
rounds of austerity measures imposed by the IMF and the EU led to massive
reductions in public health and medical services, starting in early 2009. By 2012 the Greek suicide rate and mental illness crisis had soared, pharmaceutical outages were reported all over the country, hospital hygiene and basic services had reached such low levels that
doctors advised patients not to seek
inpatient care, HIV incidence was climbing, malaria was widespread for the first time since World War II, denguespread in various regions of the country for the first time in nearly a century, and tragedy plagued every aspect of health protection in the nation. When the state of Greek health was summarized for EU leaders in a May
2013 austerity meeting the Europeans reportedly left in “a state of
shock.”

Similar, though less severe, outcomes of
austerity have been observed in Italy, the UK, Portugal, Spain and much of southern
Europe. Mortality increased inPortugal,
for example, along withother
vital indicatorsthat
collectively demonstrated a severe deterioration in the quality of the
population’s health. In the last year thecost
of seeing a doctor has doubled in
Portugal, and basic services such as kidney dialysis have
become unaffordable for the country’s huge unemployed population.

The
Centers for Disease Control and Prevention recently announced that the suicide
rate for Americans aged 35 to 64 jumped 28
percent between 1999 and 2010. The majority of the U.S. suicide increase was among Americans who turned their guns upon themselves – other forms of suicide did not increase
significantly. For the first time in U.S. history suicidal deaths exceed those due to traffic accidents.

A UNICEF survey of its field officers worldwide found dire concern
that the expanding wealth gap in societies constitutes the paramount threat to
child health in this second decade of the 21st Century. The
prominent NGO Save the Children issued a report in late
2012 stating that, “in our 32 sample countries, children in the richest decile
have access to 35 times the income that is available to children in the poorest
decile…The richest 10% of people has access to 17 times the incomes of the
poorest.”

Another
recent analysis discovered a clear correlation between widening wealth
disparity and child survival rates, demonstrating that concentration of wealth
in ever-smaller segments of populations was actually killing youngsters in poor
families.

A 2012 World Bank
survey of seventy countries offers a distinct challenge to proponents of
health equity. In contrast to expert opinions, populations within rich and poor
countries tend to place higher priority on the quality and innovation in health
services, versus equity of access to said services. As the study authors put
it, “Our results indicate that
residents of these countries may not favor the prioritization of within-country
health equality and fairness to
the same degree as residents of high-income
countries.”

Will this wealth challenge persist, even worsen, over the coming decade?
The Global Trends 2030 report issued by the U.S. National Intelligence Council (NIC) predicts
two, seemingly contradictory trends: Rising numbers of middle class around the
world even as the Gini Coefficient worsens, amid widening disparities. “Middle
classes most everywhere in the developing world are poised to expand
substantially in terms of both absolute
numbers and the percentage of the population that can claim middleclass status
during the next 15-20 years,” the NIC forecasts. Yet the middle class worldwide
could collectively possess little compared to the spectacular wealth held by
the top 2 percent richest individuals, resulting in a scenario the NIC labels
“Gini Out-of-the-Bottle,” wherein, “inequalities within countries and between
rich and poor countries dominate. The world becomes wealthier—as global GDP
grows—but less happy as the differences between the haves and have-nots become
starker and increasingly immutable. The world is increasingly defined by two
self-reinforcing cycles—one virtuous leading to greater prosperity, the other
vicious, leading to poverty and instability. Political and social tensions
increase. Among countries, there are clear-cut winners and losers.”

It is not clear
how the WHO, or any entity on the global health stage, can or will address
these issues. Both the financial sustainability of global health programs and
agencies, and the health of world populations depend on institutions that
thrived in the pre-2008 economic environment. The newly-hatched macroeconomic
environment poses severe challenges for both the survival of Global Health, as
a public good, and of the health of hundreds of millions of individuals.

Tomorrow’s Post: Part Four: The New Global
Health Architecture Does Not Match Its Emerging Mission